Varian Medical Systems Reports Strong Growth in Earnings, Sales, Net Orders, Backlog for Fourth Quarter and Fiscal 2002.Business Editors/Health & Medical Writers PALO ALTO Palo Alto, city, California Palo Alto (păl`ō ăl`tō), city (1990 pop. 55,900), Santa Clara co., W Calif.; inc. 1894. Although primarily residential, Palo Alto has aerospace, electronics, and advanced research industries. , Calif.--(BUSINESS WIRE)--Oct. 24, 2002 Quarterly Sales Increase 16 Percent, Net Orders Rise 19 Percent, Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. Climbs 17 Percent to a Record $698 Million; Company Raises Earnings Estimates for Fiscal 2003 Varian Medical Systems Varian Medical Systems (NYSE: VAR) is engaged in the design and manufacture of advanced equipment and software solutions for treating cancer with radiation, as well as x-ray tubes for original equipment manufacturers, replacement x-ray tubes and flat-panel digital subsystems (NYSE NYSE See: New York Stock Exchange :VAR) today reported net earnings of $33.8 million ($0.48 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) for the fourth quarter of fiscal 2002 versus net earnings of $23.1 million ($0.33 per diluted share) in the year-ago quarter. Net earnings for fiscal year 2002 were $93.6 million ($1.33 per diluted share) versus net earnings of $54.3 million ($0.79 per diluted share) in fiscal 2001. The fiscal 2001 reported earnings included a $5 million investment write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. and a charge of $13.7 million net of tax for the cumulative effect of changes in accounting principles, arising from the transition to SAB SAB Spontaneous abortion. See Abortion. 101 revenue recognition rules. Excluding these one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. effects in fiscal 2001, fourth quarter net earnings grew 29 percent over pro-forma net earnings of $26.3 million ($0.38 per diluted share) in the year-ago period. Net earnings for fiscal 2002 grew 31 percent over pro-forma net earnings of $71.3 million ($1.04 per diluted share) in fiscal 2001. Fourth-quarter sales were $261 million, up 16 percent from the year-ago quarter, bringing sales for the fiscal year to $873 million, up $99 million or 13 percent from fiscal 2001 totals. Net orders for the quarter were $293 million, up 19 percent from the same period last year, and net orders for fiscal 2002 totaled $974 million, up 13 percent from fiscal 2001 levels. At the end of fiscal 2002, backlog for the company stood at a record $698 million, up 17 percent from the end of last year. "The company had a superb fourth quarter and finished fiscal 2002 with great momentum," said Richard M. Levy, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Varian Medical Systems. "The market for advanced radiotherapy radiotherapy /ra·dio·ther·a·py/ (-ther´ah-pe) treatment of disease by means of ionizing radiation; tissue may be exposed to a beam of radiation, or a radioactive element may be contained in devices (e.g. systems remains vibrant. Our order growth continued to be strong in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , but we were also pleased to see substantial gains in Europe that led to overall growth in the international market. As a consequence of the overall increase in net orders, we have built the backlog by $32 million since the end of the third quarter and by $100 million from the same time last year." "In keeping with our track record for generating positive cash flow, we continued to strengthen our balance sheet, ending the year with $299 million in cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has after buying back $55 million in company stock throughout the year," said Levy. "The company also improved days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). to 80 days, down 10 days from the same period last year." Oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. Systems Oncology Systems' fourth quarter sales of Clinac(R) accelerators and ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. products as well as software and services for radiotherapy totaled $218 million, up 18 percent from the prior-year period. Oncology Systems sales for the fiscal year totaled $725 million, also up 18 percent from fiscal 2001. This business recorded fourth-quarter net orders of $249 million, up 21 percent from the same time last year, and $825 million for the fiscal year, up 18 percent from fiscal 2001 totals. "The North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market for radiotherapy systems continued to be outstanding with 27 percent annual growth in net orders and the outlook remains excellent," said Levy. He cited a recent survey of radiation oncology radiation oncology n. The branch of radiology that deals with the use of ionizing radiation to treat cancers. radiation oncology centers in which more than 90 percent of the 170 respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. indicated that they are either offering or planning to offer patients IMRT IMRT Intensity-modulated radiation therapy Radiation oncology A format for delivering high-dose RT to regions–eg, nasopharynx, that are surrounded by radiation-sensitive areas; in IMRT, a broad radiation field is divided into hundreds of small pencil beams, , the most advanced form of modern radiation oncology, within the next three years. As of the end of the fourth quarter, 186 hospitals had commenced treating patients with Varian's SmartBeam IMRT, up by more than 100 from the same time last year. "The international market for radiotherapy systems also showed promise with annual net orders growing by 4 percent," said Levy. "European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. net orders were up by 22 percent for the full fiscal year. The net order gains in Europe together with modest annual order growth in the Far East offset a sharp drop in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. where fiscal 2001 results included a large Brazilian order." Oncology Systems now represents 83 percent of the total annual sales for the company. Shortly after the close of the quarter, the business exhibited several new products and technologies at the annual meeting of the American Society of Therapeutic Radiology radiology, branch of medicine specializing in the use of X rays, gamma rays, radioactive isotopes, and other forms of radiation in the diagnosis and treatment of disease. and Oncology (ASTRO). "We have made significant progress in the development of new products and software that we expect will expedite ex·pe·dite tr.v. ex·pe·dit·ed, ex·pe·dit·ing, ex·pe·dites 1. To speed up the progress of; accelerate. 2. adoption and improve the precision of IMRT treatments," said Levy. "Customer response was overwhelmingly positive." X-Ray X-ray Electromagnetic radiation of extremely short wavelength (100 nanometres to 0.001 nanometre) produced by the deceleration of charged particles or the transitions of electrons in atoms. Products Sales for the X-Ray Products business, including tubes and amorphous silicon Silicon that does not have a crystalline structure and which is not conductive. Contrast with polysilicon. flat-panel digital imagers, were $36 million for the fourth quarter, up 1 percent from the year-ago quarter. For the full fiscal year 2002, sales totaled $122 million, down 12 percent from fiscal 2001. "We saw a recovery in tube sales in the year's second half after a very slow first half," said Levy. "This business has put in place tight cost controls and aggressive R&D programs that resulted in new X-ray tubes X-ray tube An electronic device used for the generation of x-rays. X-rays are produced in the x-ray tube by accelerating electrons to a high velocity by an electrostatic field and then suddenly stopping them by collision with a solid body, the so-called for baggage screening systems and other advanced products which have begun to generate revenue." Ginzton Technology Center The company's premier research facility, the Ginzton Technology Center, which includes financial results for contract research as well as the company's brachytherapy brachytherapy /brachy·ther·a·py/ (-ther´ah-pe) treatment with ionizing radiation whose source is applied to the surface of the body or within the body a short distance from the area being treated. business, reported $7 million in sales for the quarter, up $1 million from the year-ago quarter. Fiscal 2002 sales were $26 million, up by $5 million from fiscal 2001 levels. Net orders were $11 million in the quarter, up $3 million from the year-ago period. Fiscal 2002 net orders were $26 million, up $1 million from the total for fiscal 2001. "Our GammaMed acquisition contributed to growth in net orders and sales during the quarter," said Levy. "Our emerging brachytherapy business has now grown beyond the incubation incubation /in·cu·ba·tion/ (in?ku-ba´shun) 1. the provision of proper conditions for growth and development, as for bacterial or tissue cultures. 2. stage and is contributing to the company's profitability. We are well positioned to play a leading role in this market." Outlook "Our record backlog, driven by continuing market momentum toward IMRT, and a return to modest sales gains in the X-Ray Products business give us confidence that we can continue our solid growth trajectory Trajectory The curve described by a body moving through space, as of a meteor through the atmosphere, a planet around the Sun, a projectile fired from a gun, or a rocket in flight. in fiscal 2003," said Levy. "For fiscal 2003, we believe that sales will increase in the low teens and that earnings per diluted share will rise by about 20 percent over the comparable totals in fiscal 2002. For the first quarter of fiscal 2003, we believe that sales and earnings growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. will be slightly higher due partly to the recovery in the X-Ray Products business." The company is about 75 percent of the way through a 2 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program and the Board of Directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the continuation of the current share repurchase program through the end of February 2003. Investor Conference Call Varian Medical Systems is scheduled to conduct its conference call on results for the fourth quarter and fiscal 2002 at 2 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT today. To hear a live webcast or replay of the call, visit the investor relations Investor relations The process by which the corporation communicates with its investors. page on the company's web site at www.varian.com. Varian Medical Systems, Inc., (NYSE:VAR) of Palo Alto, California “Palo Alto” redirects here. For other uses, see Palo Alto (disambiguation). Palo Alto (IPA: /ˌpæloʊˈʔæltoʊ/, from Spanish: palo: "stick" and alto: "high", i.e. is the world's leading manufacturer of integrated cancer therapy systems, which are used to treat thousands of patients per day. The company is also a premier supplier of X-ray tubes and flat-panel digital subsystems for imaging in medical, scientific, and industrial applications. Varian Medical Systems employs approximately 2,750 people who are located at manufacturing sites in North America and Europe and in its 50 sales and support offices around the world. In its most recent fiscal year ended September, 27, 2002, Varian Medical Systems reported sales of $873 million. Additional information is available on the company's investor relations web site at www.varian.com Forward Looking Statements Except for historical information, this news release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Statements concerning industry outlook, including market acceptance of or transition to new products or technology such as IMRT; growth drivers; our orders, sales, backlog, or earnings growth; future financial results and any statements using the terms, "will," "believe," "expect," "should," or similar statements are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties that could cause our actual results to differ materially from those anticipated. Such risks and uncertainties include our ability to successfully integrate acquired businesses, demand for our products; our ability to develop and commercialize new products; the impact of competitive products and pricing; the effect of economic conditions and currency exchange rates; our ability to maintain or increase operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ; our ability to meet demand for manufacturing capacity; the effect of environmental claims and expenses; our ability to protect our intellectual property; our reliance on sole or limited source suppliers; the impact of managed care initiatives or other healthcare reforms on capital expenditures and/or third-party reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. levels; our ability to meet FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. and other regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. or product clearances; the potential loss of key distributors; consolidation in the X-ray tubes market; the possibility that material product liability claims could harm future sales or require us to pay uninsured claims; our potential responsibility for additional liabilities arising out of the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of segments of our former businesses; and the other risks listed from time to time in our filings with the Securities and Exchange Commission. We assume no obligation to update or revise the forward-looking statements in this release because of new information, future events or otherwise.
Varian Medical Systems, Inc. and Subsidiary Companies
Consolidated Statements of Earnings
(Dollars and shares in millions, except per share amounts)
(Unaudited)
Q4 QTR Q4 QTR Q4 YTD Q4 YTD
2002 2001 2002 2001
Net orders $ 293.4 246.9 973.6 858.2
Oncology Systems 249.4 206.4 824.8 699.4
X-Ray Products 33.5 33.1 122.9 134.1
Ginzton Technology Center 10.5 7.4 25.9 24.7
Order backlog $ 698.2 597.8 698.2 597.8
Sales $ 261.4 226.0 873.1 773.6
Oncology Systems 218.4 184.4 724.9 613.7
X-Ray Products 36.3 35.7 122.4 138.7
Ginzton Technology Center 6.7 5.9 25.8 21.2
Gross margin 107.7 86.8 339.3 287.0
As a percent of sales 41.2% 38.4% 38.9% 37.1%
Operating expenses
Research and development 13.1 10.4 48.4 43.6
Selling, general and
administrative 42.6 36.0 146.1 134.0
Operating earnings before
reorganization expenses 52.0 40.4 144.8 109.4
Reorganization expenses (0.2) -- (0.2) (0.5)
Operating earnings 52.2 40.4 145.0 109.9
As a percent of sales 20.0% 17.9% 16.6% 14.2%
Write-off of equity
investment -- 5.0 -- 5.0
Interest (income)/expense,
net (0.7) (0.6) (1.3) (2.1)
Earnings before taxes 52.9 36.0 146.3 107.0
Taxes on earnings 19.1 12.9 52.7 39.0
Earnings before cumulative
effect of change in
accounting principle 33.8 23.1 93.6 68.0
Cumulative effect of change
in accounting principle,
net of tax(1) -- -- -- (13.7)
Net earnings(3) $ 33.8 23.1 93.6 54.3
----------------------------------------------------------------------
Net earnings per share
&#x 1; basic:(2)(3)
Earnings before cumulative
effect of change in
accounting principle $ 0.50 0.34 1.38 1.03
Cumulative effect of
change in accounting
principle, net of tax(1) -- -- -- (0.21)
--------- --------- --------- ---------
Net earnings per share
- basic $ 0.50 0.34 1.38 0.82
========= ========= ========= =========
Net earnings per share
&#x 1; diluted:(2)(3)
Earnings before cumulative
effect of change in
accounting principle $ 0.48 0.33 1.33 0.99
Cumulative effect of
change in accounting
principle, net of tax(1) -- -- -- (0.20)
--------- --------- --------- ---------
Net earnings per share
- diluted $ 0.48 0.33 1.33 0.79
========= ========= ========= =========
Shares used in the
calculation of net
earnings per share:(2)
Average shares
outstanding - basic 68.0 67.3 67.7 65.9
========= ========= ========= =========
Average shares
outstanding - diluted 70.7 70.2 70.2 68.5
========= ========= ========= =========
----------------------------------------------------------------------
Supplemental disclosure -&#x 1; Results excluding the effect of the $5
million investment write-off and the cumulative effect of change in
accounting principle related to SAB 101
Net earnings $ -- 26.3 -- 71.3
========= ========= ========= =========
Net earnings per share
- basic $ -- 0.39 -- 1.08
========= ========= ========= =========
Net earnings per share
- diluted $ -- 0.38 -- 1.04
========= ========= ========= =========
----------------------------------------------------------------------
(1) Note: The cumulative effect of change in accounting principle
reflects the net effect of the Company&#x 1;s adoption in the first
quarter of fiscal year 2001 of: (a) Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," ($0.1 million income, net of
tax); and (b) Staff Accounting Bulletin No. 101 "Revenue
Recognition in Financial Statements" ($13.8 million charge, net of
tax).
(2) Note: The results for the fourth quarter of fiscal year 2001 and
the twelve months of fiscal year 2001 have been restated for the
two-for-one stock split (effected in the form of a stock dividend)
paid on January 15, 2002.
(3) Note: If the Company had elected to recognize stock compensation
costs based on the fair value of options granted on their grant
dates as prescribed by SFAS No. 123, FY 2001 net earnings would
have been reduced by $16.5M, and net earnings per share basic and
diluted would have been reduced by $0.25 and $0.24 per share,
respectively.
Varian Medical Systems, Inc. and Subsidiary Companies
Consolidated Balance Sheets
(Dollars in thousands, except par values)
September 27, September 28,
2002 2001
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 160,285 $ 218,961
Short-term marketable securities 41,035 --
Accounts receivable, net 237,345 227,794
Inventories 123,815 111,777
Other current assets 88,879 60,971
----------- -----------
Total current assets 651,359 619,503
----------- -----------
Property, plant and equipment 226,324 209,105
Accumulated depreciation and
amortization (144,184) (133,279)
----------- -----------
Net property, plant and equipment 82,140 75,826
----------- -----------
Long-term marketable securities 97,529 --
Goodwill 59,996 49,870
Other non-current assets 19,253 14,000
----------- -----------
Total assets $ 910,277 $ 759,199
=========== ===========
Liabilities and Stockholders&#x 1; Equity
Current liabilities
Notes payable $ 58 $ 174
Accounts payable - trade 45,776 44,839
Accrued expenses 199,836 149,424
Product warranty 30,725 23,975
Advance payments from customers 81,688 66,942
----------- -----------
Total current liabilities 358,083 285,354
Long-term accrued expenses and other 20,891 20,949
Long-term debt 58,500 58,500
----------- -----------
Total liabilities 437,474 364,803
----------- -----------
Stockholders&#x 1; Equity
Common stock(1) 67,790 67,359
Capital in excess of par value(1) 115,088 87,913
Retained earnings and accumulated
other comprehensive loss 289,925 239,124
----------- -----------
Total stockholders&#x 1; equity 472,803 394,396
----------- -----------
Total liabilities and
stockholders&#x 1; equity $ 910,277 $ 759,199
=========== ===========
(1) Note: The consolidated balance sheets as of September 27, 2002 and
September 28, 2001 reflect the two-for-one stock split (effected
in the form of a stock dividend) paid on January 15, 2002.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion